Business is about relationships. Relationships are about people. So it should be obvious that people do business with people, not businesses.

Yet I’m always surprised how many small business owners miss this. Somewhere in all their efforts to develop their business plan and marketing strategy they seem to forget that it’s about the people.

Maybe it’s using terms like target audience or niche market that somehow dehumanizes their thoughts, I’m unsure. Or perhaps it’s the way we think about business in general as being a cold, cut-throat world where business owners are always trying to gain an upper hand on the competition. I know it’s hard to see people when we’re thinking like that.

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You know I love word of mouth marketing. I find it to be one of the purest, simplest and most rewarding ways of getting my business known.

But did you know that word of mouth marketing can be illegal?

According to Andy Sernovitz there’s a new bill (pdf) being introduced in the U.K. which will make some marketing practices illegal. The bill is meant to stop false and misleading marketing practices. Of course, word of mouth marketing could easily fit into that category if marketers were deceptive about their campaigns.

So what makes word of mouth marketing illegal?

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A couple of years ago John was laid off from his job working in the assembly plant for Ford Motor company. He’d been there 15 years and came to work on a Tuesday to find out he was being laid off.

John had worked at some sort of job since he was nine. He had a paper route, then three. When he was eleven he started mowing lawns for neighbors. That quickly grew to raking leaves and shoveling snow.

John never much liked school and so as many of his friends went off to college after graduation, John landed a job with Ford assembling dashboard parts on the assembly line. Good work – and great pay – for a eighteen year-old.

Now, at thirty-four John found himself out of work. John hadn’t married yet – though he was dating the woman who would become his wife. And living a simple life in a modest house he managed to sock away a nice little nest egg.

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Have you ever considered quitting?

Neither had I. But since hearing Seth Godin speak about his book, The Dip: A Little Book That Teaches you When to Quit (and When to Stick), last year it’s constantly been on my mind.

In The Dip, Seth suggests that all successful people know one thing before they become successful – they know when to quit. They know when to recognize when what they’re doing isn’t going to generate success. So what do successful people do? They quit. They quit doing what’s not leading them toward success so they can put their efforts into things that can lead to success.

As with Seth’s usual approach, he uses The Dip to talk about how to become the best in the world. This seems to be his new way of saying do something remarkable. But the core message is the same – be great to those who think you’re great. In other words – find your niche and become known as being great to those who you interact and work with.

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Every business owner wants to make more money.

Doesn’t matter whether you sell products or pitch a service – you probably want more clients, customers, buyers, patrons, consumers, subscribers, users, etc. Doesn’t matter what you call them – you’d like more.

After all, doesn’t more subscribers equal more people to market too? More patrons mean increasing sales? And increased sales equals more revenue. Isn’t that how it works?

Most of us know that. Yet many business owners set their focus too strongly on increasing revenue. They spend their time, their energy and their resources focused on making more money. And so they become like a hamster running around the wheel of trying to increase their profits – often, getting nowhere.

But what if you took some of that time to build relationships with your clients and customers? What if you took some time to build relationships with some of your leads? Better yet, what if you spent some time and resources to build relationships with other business owners? Businesses that compliment yours in one way or another. Or grew relationships with other business owners you have other interests in common with? What could happen?

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There are lots of keys to creating a successful business. Yet the one that I’ve found to be most important – and often most lacking in small businesses is positioning.

There’s lots of definitions of positioning because the term is often used along side branding. The definition that I gravitate to is:

Positioning is the space that you wish to occupy in your target audience’s mind, relative to your competitors.

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In truth, having a web-based business isn’t difficult.

What’s difficult is getting really clear about who you are, what you do and who you do it for. The problem is, there are tons of approaches for doing this which sometimes leads to confusion. Do I need to write a business plan? What about vision? Etc. The questions are many, but the answer are endless.

Of course, once you’ve answered the questions about your business, you have to ask a whole other series of questions around marketing. What system? What mediums? How best to reach our target audience? Etc. This can lead to even greater confusion, frustration and waste of time and money than the business development quesitons.

This whole process can be really big. That’s why I’m always looking for ways to simplify it. Because, really, developing and growing a business isn’t as hard as we make it. Basically, we need to create a compelling service – one that solves a problem that people need solved. Then, we put our service in front of the people who have the problem. That’s really it.

So it’s really very simple – especially with the internet.

That’s why I was excited when I found Matt Cutts‘ 3-step process to building up a really good site (read: business). Take a watch:

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Matt Cutt’s 3-Step Process

1. Create a compelling service – spend the time to create something people can love.
2. Start a blog – get links and engage in conversation.
3. Smart marketing – SEO and have something interesting to say.

Pretty simple, right?

So if I was taking Matt’s 3 steps and putting them in my language, I’d say:

1. Create a service, you love, that solves a problem that needs solving. What are you good at? What do you love? What is the need? Bring these three questions together and you’re on your way.
2. Start a blog – and learn how to use it. First write, and write often. Join in the conversation on other blogs immediately. Learn about linking and link often. And really learn how to use one of the social networking sites. You can get to the others later.
3. Get the word out and be authentic – Matt says if you use WordPress, much of your SEO is handled for you already. I’d say 80%. The other 20% is in the details. So worry less about SEO in the beginning and more about the quality of your content. And have something interesting to say – but say it in your way. Be a real person because it’s people that people want to do business with.

So if it’s this easy, why don’t more of us do it? What gets in the way? And why do we make it so difficult?

What do you think?

(note: image, Joe Walking Up The Steps from hip.kids on Flickr)